I think the best definition I've heard for "money" comes from Mike Green of Logica (paraphrasing): "money is that which can repay debts or be collected by the Tax Man."
Banks, QE, and Money-Printing
221–230 of 249 posts
Re: Banks, QE, and Money-Printing
#222Earlier quoted context omitted.
Not quite accurate, as it depends, this explains some of the other relevant variables in the equation: https://www.forbes.com/sites/johntharvey/2011/05/14/money-gr...
John Harvey is heterodox. Essentially the equivalent of climate change denial for economists.
So you are disagreeing with what he asserts in the article? Please elaborate.
> Essentially the equivalent of climate change denial for economists
I don't know him, but that sounds like a stretch...
Re: Banks, QE, and Money-Printing
#223Good. I hope the us economy fails and goes into depression.
Re: Banks, QE, and Money-Printing
#224Earlier quoted context omitted.
Health-"care" costs are rising even faster - premiums are rising 13-15% EVERY year. And the only way you see it in full is when you are self-employed. If you have employer-sponsored health insurance, some part of the increase is covered by the company - at the expense of your salary increase or bonus, of course.
That's because health insurance premiums are actually a tax. You're not paying for your healthcare, you're paying for your healthcare plus the healthcare of someone who can't afford it, such as poorer people or older people. The ACA limited how health insurance companies could determine premiums by restricting it to just someone's age, which means they can't take into account pre existing conditions or whether or not…
I don't have a problem chipping in to cover those who can't afford it.
I DO have a problem with paying at least 50% more than the next highest spending countries like Switzerland or Norway - all with excellent healthcare systems - probably better than the US (except for the very high-end)
Re: Banks, QE, and Money-Printing
#225Earlier quoted context omitted.
Disagree. :-) Printing money does not automatically lead to inflation. Since inflation is just the price of stuff rising, the question becomes, when do prices rise? The price can rise for multiple reasons: The price can rise because the company just wants to charge more, like Apple. The price can rise because a company's underlying cost rises. Maybe some type of metal became more expensive. Either way, the only way t…
> Since inflation is just the price of stuff rising... Inflation literally is money printing. Price increases is not inflation. Price increases can be caused by inflation. Prices can remain nominally the same while money supply has increased. > So, do prices rise just because a certain amount of dollars were added to an economy ? No, certainly not. Which is why the money printing should only happen when the economy i…
> Inflation literally is money printing. Price increases is not inflation. Price increases can be caused by inflation. Prices can remain nominally the same while money supply has increased.
Well, in today's world it is. Yes, not according to your 'old-school' definition of it. But if anyone says "inflation" today - it means price increases. Nothing more, nothing less.
> The prices while having not risen nominally are still artificially inflated. Care to explain?
> It is just the economy. If you are referring to a recession, printing money during a recession arguably may not cause prices to rise nominally, but it artificially inflates them.
Yes, I meant a recession. Please, once again, elaborate what you mean by "artificially inflated prices"?
> During a recession prices typically go down due to falling demand. This is a good thing. It allows people who are suffering to enjoy lower prices.
Ehh, ok. So what happens to those people when companies start making less money?
> Recessions are a healing process for a previous period of misallocation of resources.
Care to explain how resources are "misallocated"?
> Money printing only serves to exacerbate and extend the misallocation.
Lol, no it doesn't. Sounds like a neoclassical fairytale. In a recession, you are arguing that one shouldn't print money, because it only "extends misallocation". Please explain me a proper allocation and a misallocation. Makes no sense. Newly printed money would add demand - as it should. It would create jobs and have nothing to do with "misallocation", That "misallocation" sounds like a conservative argument. No one can explain or prove it, or even make sense of it, but if you keep repeating it, then people will believe it.
> We left the gold standard because we were afraid to deal with the recession from the spending of '60s No, America left it because it was a shit system. Capitalism is inherently monetary. Having a currency pegged hinders growth and only serves to avoid inflation for the rich. Rentier capitalism doesn't like inflation.
Re: Banks, QE, and Money-Printing
#226Earlier quoted context omitted.
That's because health insurance premiums are actually a tax. You're not paying for your healthcare, you're paying for your healthcare plus the healthcare of someone who can't afford it, such as poorer people or older people. The ACA limited how health insurance companies could determine premiums by restricting it to just someone's age, which means they can't take into account pre existing conditions or whether or not…
I don't have a problem chipping in to cover those who can't afford it. I DO have a problem with paying at least 50% more than the next highest spending countries like Switzerland or Norway - all with excellent healthcare systems - probably better than the US (except for the very high-end)
Bringing the price of healthcare down simply has to do with increasing the supply of healthcare providers and medicine. Technically, I guess the nation could also work on reducing the demand side of healthcare by promoting better diets and exercise, but I won't hold my breath on that one.
The prior is already happening with the introduction of PA and NPs taking over roles that MD/DOs used to do (for better or for worse, I've seen many discussions on how PA/NP education is very lacking and the bar to qualify is too low, which I agree with).
I don't know much about increasing supply of medicine, but that probably has to do with patent reform and/or FDA approvals for slightly modified medications.
There's also probably something about liability and litigiousness that is a factor of higher prices in the US.
Re: Banks, QE, and Money-Printing
#227If they print money to build new roads, bridges, (clean) power plants, schools -> good. If they print money to put in stocks and real estate -> bad. The one thing creates real value and enables more real value creation in the future. The other one has no effect on the real economy and wages. Driving real estate prices is even bad: at some point, no real economic strategy (aka. business model) is able to sustain the n…
In the US they will print money to bailout poorly run cities and towns, and especially to bailout pension funds (the two are often linked). This is presuming a Biden victory.
Re: Banks, QE, and Money-Printing
#228Earlier quoted context omitted.
> Most people are barely getting 1% annual raises which means income increases by 138% over the same period. Where is that 1% coming from? It seems to me US salaries growth pretty much followed 3/5% average for the last 50 years, with some obvious drawdowns during crises. Source: https://tradingeconomics.com/united-states/wage-growth > In the last 4 decades wages have barely increased, but major assets like cars and…
Your points actually contradict each other. Do interest rates trump supply and demand and global capital movements, or not? Here's a graph of median personal income: https://fred.stlouisfed.org/series/MEPAINUSA672N And here's a graph of median house prices: https://fred.stlouisfed.org/graph/fredgraph.png?id=MSPUS&nsh... That is almost exactly an increase of 8X, compared to roughly 1.5X for personal income. Do you thi…
"And the standard deviation for property prices has increased hugely."
Abuse of the terms average and median absolutely slays me. Simply erases rising inequity from the conversation. I don't even know how to respond.
Maybe standard deviation would work. Is there a layperson's version of this phrasing?
Re: Banks, QE, and Money-Printing
#229The fundamental issue with this article is that the inflation number is a lie. Housing costs are the key cost for every consumer but are excluded from CPI. Western countries have been running fiscal deficits consistently for decades, QE and low interest rates for 10 years. Yet for academics and central bankers the only answer to growth is more debt. Low interest rates benefit only the asset rich. They deprive everyon…
I agree. Here is the critical damage to American workers from money printing: * Hourly pay rates are locked in when people are hired. Workers completely lose their negotiating power after being hired. "Sticky prices" in economic terms applies to workers salaries also. * In an ideal world, workers would job hop aggressively to move up their hourly pay rate. They don't for good reasons (for their company, for the econo…
to pick a nit, inflation between 1800 and 1899 varied from as high as +25% (around 1865) to as low as -14% (about 1805). The 1800's were a time of extreme economic volatility in the USA: a few dozen financial panics; crazy economic bubbles; waves of bank failures every few years; astounding opportunities for enrichment, etc. It was the best of times and the worst of times.
Re: Banks, QE, and Money-Printing
#230The fundamental issue with this article is that the inflation number is a lie. Housing costs are the key cost for every consumer but are excluded from CPI. Western countries have been running fiscal deficits consistently for decades, QE and low interest rates for 10 years. Yet for academics and central bankers the only answer to growth is more debt. Low interest rates benefit only the asset rich. They deprive everyon…
The issue is, housing is not just houses. Maybe it was 100 years ago when it made no difference whether you live near a plain or a river (just easier access to water?). The problem is, housing become linked to economic opportunity in a particular region. For example, people who might have lived in Long Island might not have a much different life/income than those who lived in ElPaso. It was just different weather.
But the mighty Manhattan changed this. The people who were born to Long Island's households now have access to this city. This is an economic opportunity that is not available to anybody else's in the entire world. Would it be fair to incorporate this economic opportunity in the value of this home? I think so. The market thinks so.
This is a result of the winner take all economies will live in. Whether you are a person, a city or a country. The same logic still applies.